CH12 Business Law by Beatty Samuelson Abril 8th Edition

Question 1

CH12 Contracts have 7 key characteristics. What are they?

Answer 1

Offer
Acceptance
Consideration
Legality
Capacity
Consent
Writing

P 281

Question 2

Ch 12

What is the person who makes a contractual offer called?

What is the person to whom an offer is made called?

What two questions determine if a statement is an offer?

Answer 2

The offeror.

The offeree.

Is there intention to make a bargain?

Are the terms of the offer reasonably definite?

P 303

Question 3

CH 12

Statements that usually do not amount to offers. Name 5.

Answer 3

Invitation to bargain, Price Quote
Letter of Intent, Advertisement
Auction

P 303 - 306

Question 4

CH12 How are goods defined by the UCC Universal Commercial Code? (Article 2 of the UCC)

Answer 4

Goods are moveable, tangible objects.

P 309

Question 5

CH12 Universal Commercial Code can modify common law, sometimes in major ways.

What is one way that the UCC modifies common law?

Answer 5

The terms of an offer must be definite.
Under the UCC many indefinite contract are allowed to stand.
The UCC makes sales law more flexible.

P 309

Question 6

CH12 Under UCC mode, a contract does not fail due to being indefinite.

The parties:

Answer 6

The parties intended to contract.

An appropriate remedy has a reasonably certain basis.

The sale of goods may be enforced as a contract when there is missing a key term.

P 309

Question 7

CH12 What are gap-filler provisions?

Answer 7

Rules for supplying the missing terms in a contract.

P 310

Question 8

CH12 Where a price is not determined in the contract, the UCC code states: that the goods will be sold at a reasonable price.

Answer 8

that the goods will be sold at a reasonable price.

P 310

Question 9

CH12 What is an output contract?

What is a requirements contract?

Are they considered complete or incomplete contracts?

What is the UCC code requirement under these conditions?

Answer 9

In an output contract the buyer agrees to buy all of the seller’s output. Also the seller agrees to sell all of his output to this specific buyer.

In a requirements contract, the buyer must buy all of his goods from the seller.

These contracts are considered incomplete contracts due to unspecified quantities.

That the buyer and the seller act in good faith.

Neither may demand a disproportionate amount of goods in regards to reasonable estimates and history.

P 310

Question 10

CH12 Termination Offers - what can happen with a termination offer?

Answer 10

An offer can be either accepted or terminated. Once terminated it can never be accepted.

If accepted and
If there are no issues with the five remaining requirements of the Contracts Checklist, (Offer, Acceptance met), Consideration,
Legality, Capacity, Consent, Writing, then the contract is valid.

P 310

Question 11

CH12 How can offers be terminated (4 ways):

Answer 11

Revocation, rejection, expiration, or operation of law.

P 310

Question 12

CH12 What is an option contract?

Answer 12

An option contract - a purchaser pays for (buys) the right to have the offer held open.

The offer may not be revoked during that period of time.

P 310

Question 13

CH12 What is a Firm Offer? (pertaining to UCC contracts)

Answer 13

A merchant makes a promise in writing, the document is signed by the merchant, and in the document the merchant agrees to hold open an offer for a defined period of time, the offer may not be revoked during that time period.

The time period may not exceed 3 months.

You do not have to exchange money for a firm offer to be binding.

P 310-311

Question 14

CH12 Termination by Rejection.

Answer 14

An offeree clearly rejects an offer. The offer is now dead (terminated) and cannot be revived.

P 311

Question 15

CH12 What is a Counteroffer and its conditions?

Answer 15

One of the parties makes a new and different proposal. A counteroffer is a rejection if its terms are not met. The offer prior to the counteroffer was dead when the counteroffer was placed.

P 311

Question 16

CH12 What is Termination by Expiration?

Answer 16

An offer has a set time limit, and there is no acceptance until after that time limit expires.

P 311

Question 17

CH12 What is Termination by Operation of Law?

Answer 17

It is possible for the law to terminate an offer. If the offeror dies or becomes mentally incapacitated.

Destruction of the subject matter also terminates an offer.

P 311

Question 18

CH12 What is an acceptance?

Answer 18

An offeree does or says something that would be reasonably understood to mean that the offer is accepted. Note the offeree must say or do something.

P 311 - 312

Question 19

CH12 What is the mirror image rule?

Answer 19

The acceptance must be the precise same terms as the offer. Otherwise the acceptance is not valid.

P 312

Question 20

CH12 What is the Battle of the Forms?

Answer 20

Standardized forms are exchanged back and forth, and they are not the same wording. If the contract is governed by common law, the mirror image rule is still the law. The UCC code attempts to make this situation easier.

P 312

Question 21

CH12 How does the UCC code address the Battle of the Forms?

Answer 21

If there is an acceptance that changes the terms often will create a contract.

A contract is a valid offer if the intends to accept. No intent to accept, no contract.

Therefore, the acceptance with new terms can create a contract.

The offer with the changes should say that acceptance is conditioned on the offeror’s assent to the changed terms.

Otherwise there is no contract.

P 312 - 313

Question 22

CH12 What are additional terms?

Answer 22

Additional terms bring up new conditions, such as delivery delays, interest rates on balance due, etc.

Both parties being merchants creates the assumption that the additional terms will become part of the contract.

There are three conditions where additional terms do not become part of the contract. See the next card.

P 313

Question 23

CH12 Three conditions where additional terms do not become part of the contract:

Answer 23

The original offeror insisted on its own terms.
If the additional terms materially alter the original offer.
If the offeror receives the additional terms and promptly objects to them.

P 313

Question 24

CH12 How do we define different terms?

Answer 24

These are terms that contradict the terms of the offer.

P 313

Question 25

CH12 An acceptance contains different terms. That can create a contract. How?

Answer 25

Courts can struggle to define the terms of the contract due to changes in terms. The majority of states hold that contradictory terms cancel each other out. Neither term is included. The neutral terms from the UCC replace the terms (see gap-filler terms).

P 313

Question 26

CH12 If terms are changed in an acceptance, does it create a contract?

Answer 26

If goods are involved, it can. If services are involved it does not.

In regards to in the case of goods, see the three situations where additional terms in the acceptance do not become part of the contract.

P 313

Question 27

CH12 What are Clickwrap and Browsewrap agreements?

Answer 27

Clickwrap: You make an online purchase and agree during the transaction to terms. Many courts find these terms binding.

Browsewrap: Terms are posted somewhere in their website or available via a hyperlink, and just by visiting the site you are agreeing to the terms. If you do not click on the hyperlink, the court may possibly find that the terms had not been agreed to.

P 314

Question 28

CH12 Method and Manner of Acceptance: What do they mean?

Answer 28

Method of Acceptance: this refers to the acceptance being done by mail, in person, email, fax or telephone.

Manner of Acceptance: How does the offeree accept the offer? by paying money, by promising, through a form of performance? If an offer requires accepting in a specific manner, the offeree must follow those requirements. Doing this creates a contract.

If there are no acceptance requirements, the offeree may accept by any reasonable means.

P 317

Question 29

CH12 The Mailbox Rule. What is the Mailbox Rule?

Answer 29

The acceptance is effective at the time of dispatch; in other words, at the moment it is put in the mailbox. It is effective when it leaves the offeree’s hands.

Terminations are effective when received.

P 317

Question 30

CH12 Most litigation regarding offer and acceptance comes from what?

Answer 30

Lack of clarity.

P 317